By Choonsik Yoo and Yena Park

SEOUL (Reuters) -South Korea’s plans to loosen restrictions in its forex market will increase the received’s standing globally and increase enterprise alternatives for native monetary corporations, a vice finance minister instructed Reuters on Thursday.

The brand new measures, unveiled earlier this week, name for greater than doubling the buying and selling hours for the received till previous midnight native time and permitting certified international monetary corporations to straight commerce the forex by means of two onshore spot brokerage homes.

Vice Minister Bang Ki-sun stated the federal government was engaged on follow-up measures with the goal of implementing the plans in July subsequent yr, whereas dismissing considerations the strikes may make the received extra unstable.

“We aren’t totally permitting the received to be freely traded exterior the nation however simply make it extra convertible,” Bang instructed Reuters in an interview, including the federal government would nonetheless keep its oversight over the monetary establishments buying and selling the received.

South Korea has grown to one of many world’s prime 10 economies in only a few many years however has saved a decent grip on its forex market, primarily out of the trauma from its close to sovereign default within the late Nineties in the course of the Asia monetary disaster.

South Korea’s economic system contracted within the December quarter however Bang stated the latest info indicated it might return to development within the January-March interval, with out offering particular information.

He stated there was no significant issue seen behind huge international fund outflows previously two consecutive months from native bond market, apart from the very fact there was a considerable amount of bonds coming to maturity in the course of the interval.

RISKS FROM REAL ESTATE MARKET SLUMP

Bang additionally stated there was nearly no hazard of South Korea’s cooling actual property market inflicting a systemic threat to the bigger monetary system, noting coverage measures have succeeded in diffusing cash market strains associated to property initiatives.

Home costs in South Korea fell 1.98% in December from a month earlier, the quickest drop since information releases started in late 2003 and a seventh consecutive month of decline.

“Whereas there may nonetheless be corporations falling into hassle individually, we are able to take care of them with focused measures, however generally, I do not see the true property market-related issues will trigger a broader systemic threat,” Bang stated.

The three-month business paper yield had soared by greater than 200 foundation factors (bps) in just a few weeks from simply above 3% in late September final yr on considerations about attainable debt defaults by property builders.

The federal government, together with the monetary regulator and central financial institution, has since stepped in with a sequence of help programmes and the yield has fallen retreated by greater than 100 bps in a number of weeks.

Relating to the received’s fast acquire of greater than 15% over the previous three months, Bang performed down its impression on exports, saying the nation’s exporters now compete with their model energy and high quality moderately than costs.

“Korea’s export construction has been altering towards relying extra on high quality competitiveness, and so, we must always make extra efforts to that path,” Bang stated, whereas explaining the minimal impact of the international trade charge on exports.